Morocco - Agricultural Research and Extension Project

Document of The World Bank FOR OFFICIAL USE ONLY Repoit No. P-5021-MOR MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$28 MILLION TO THE KINGDOM OF MOROCCO FOR AN AGRICULTURAL RESEARCH AND EXTENSION PROJECT MARCH 17, 1989 This docment has a restricted distribution and may be used by recipients obaiy in the performance of their officia duties. Its contents may not otherwise be disclosed wfithout World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Dirham (DH) US$1.00 5 DH 8.00 DH 1.00 = us$o.125 WEIGHTS AND MEASURES The metric system is uked throughout this report. 1 Hectare (ha) = 1000m2 1 square kilometer = 100 ha 1 metric ton = lOGO kg ABREVIATIONS CT = Extension Center DVRA = Department of Extension and Agrarian Reform INRA = National Institute for Agricultural Research MARA = Ministry of Agriculture and Land Reform FISCAL YEAR January 1 - December 31  FOR O1TICUL USE ONLY KINGDOM OF MOROCCO AGRICULTURAL RESEARCH AND EXTENSION PROJECT Loan and Project Summary Borrower Kingdom of Morocco Beneficiary Ministry of Agriculture Amount US$28 million Terms 20 years including a 5 year grace period with interest at the Bank's standard variable interest rate. Onlending Terms Not applicable Financing Plans Government US$17.2 million Cofinancing (bilateral sources) US$15.6 million IBRD US$28.0 million Total US$60.8 million Staff Appraisal Report No. 6943 MOR Date: March 17, 1989 Map No. IBRD 19939R This document has a restdcted distribution and may be used by recipients only in the performance of their official duties Itis contents may not otherwise be discloked without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR AN AGRICULTURAL RESEARCH AND EXTENSION PROJECT 1. The following memorandum and recommendation on a proposed loan to Morocco for US$28.0 million is submitted for approval. The proposed loan would be for 20 years including a 5 year grace period with interest at the Bank's standard variable interest rate ard will help finance an Agricultural Research and Extension Project. 2. Background. Agriculture in Morocco accounts for some 17% of GDP and 15% of exports in 1989, and employs some 40% of the labor force. While growth in the latter half of the seventies averaged 4.4% p.a., growth fell back to 1.02 in the eighties through 1985. The productivity of the sector has remained well below potential due to: (a) succeseive droughts every other year on average, over the last fifteen years; (b) poor performance of agricultural research and absence of well defined extension systems; and (c) influence of the macro-economic and sector-specific prices and incentives policies followed by Government. Food production failed to keep pace with demand generated by rapid population growth, high rate of urbanization and declining real prices for food; food imports increased and self-sufficiency ratios fell to 60% for cereals and 15% for edible oils. In response to the poor performance of the sector, Government initiated a medium term sector adjustment program in 1985 with the objectives of: restructuring the investment program, correcting the prices and incentives framework, building up institutional capacity for agricultural planning and policy analysis, strengthening agriculture support services including research and extension, and resolution of the basic issues of improving productivity of land use and protecting the natural resources base. The Bank has strongly supported this overall program through two agricultural sector adjustment loans. Recent growth in exports and productivity provides encouraging evidence that the adjustment program is working. 3. As part of the strengthening of agricultural support services, critical steps to reorganize research and extension institutions using results from previous Bank financed projects, have already been initiated and would be further developed and completed by the proposed project. In 1984, Government instigated the preparation of master plans for research and extension and has 3489E  -2- accepted the main recommendations which include steps to: (a) focus research work on crops that will enhance staple food production to improve self-sufficiency and export potential; (b) reorganize the research services and consolidate the research network; (c) develop more technical packages meeting farmers' requirements; (d) reorganize extension services along the lines of the Training and Visit system; (e) introduce a carefully designed linkage between research and extension; and (f) for both research and extension bring staff numbers up to the minimum level required, strengthen training programs and improve career development. The setting up of a coherent national research and extension program which followed acceptance of these recommendations, provides an appropriate framework into which to fit the various existing interventions and represents a major breakthrough in institutional reform. Implementation of these recommendations has already started on Bank financed irrigation and rainfed development projects, and will be gradually applied nationwide. Given Government's financial constraints, the immediate emphasis is on improving the efficiency of existing resources by redeploying existing manpower. While disbursements on existing agricultural projects have been slow in the past due primarily to these financial constraints, following project restructuring and inclusion of the agricultural portfolio in the core investment program which is being monitored under the Structural Adjustment Loan (Ln 3001-MOR), they can be expected to pick up. 4. Rationale for Bank Involvement. Improvement in technology generation and transfer have been identified by Government and the Bank as key priorities for further growth of the Moroccan agricultural sector. The Bank has been closely involved in the steps taken during the past three years to prepare the reform of research and extension institutions and a number of reforms have already been implemented through: (a) the two agriculture sector adjustment loans which tackle price policy and the improvement of supporting input supply services; and (b) four rural development projects, a large scale irrigation improvement project and 28 pilot extension centers (CT) throughout the country, in which new extension techniques using the Training and Visit contact group approach are being tested. The strengthening of national research and extension institutions is fundamental to expanding agricultural productivity and output, improving diversification and self-sufficiency and increasing export earnings. While a good start has been made on initial changes to the organizations, several years would be needed before the necessary reforms are fully implemented and the commitment to this undertaking should be for at least ten years. The Bank's involvement during preparation has been instrumental in focussing Government agencies on the essential elements of the overall agriculture strategy. The continuation of this involvement both financially and through advice, is important for the continued success of this strategy. Bank involvement is justified because it would be available at a time when government is showing strong interest in improving its critical financial situation and trying to alleviate the burden of staple commodities imports. In addition, only the Bank can provide the necessary financing and monitoring capacicy to carry out such a large project. 5. Project Obiectives. The objectives of the proposed project are to establish efficient national research and extension institutions for the development and dissemination of improved agricultural technology so as to increase agricultural productivity, production of food, livestock and cash crops, and farmers' inco-es throughout the country. The project would reorganize and strengthen the National Institute for Agricultural Researth (INRA) and the Ministry of Agriculture's Department of Extension and 3489E  -3- Agrarian Reform (DVRA). A key objective would be improving liaison between research, extension and training services and farmers as a necessary condition to ensure proper orientation of research work and better and faster transmission of suitable technical recommendations to farmers. 6. Project description. The project would comprise a first, five year time slice of a ten year program to reform research and extension services. The research component would include: (a) strengthening of INRA's management structure; (b) development of programming by objectives for 5 research priority areas including work on bread wheat, forage crops, livestock, oil crops and olives; (c) decentralization of researr' management and development of two regional research centers; (d) rehabilitation of 13 research farms; (e) establishment of 8 research/development units; (f) strengthening of the information/documentation division at INRA; (g) training, technical assistance and fellowships; and (h) improvement of INRA's personnel and financial management in liaison with measures taken under the second agricultural sector adjustment loan. The extension component would be carried out through the DVRA and the provincial agricultural extension services and would include: (a) reorganizing extension services into a strong specialized service; (b) implementation of new extension systems based on the Training and Visit system; (c) training, technical assistance and fellowships; and (d) establishing a monitoring and evaluation system. Institutional arrangements for coordinating research and extension programs would be strengthened. The project would provide funds for civil works, vehicles, furniture and equipment, training, technical assistance and incremental operating costs and staff. The total cost of the project is estimated at US$ 60.8 million with a foreign exchange component of US$ 27.1 million. A breakdown of costs and the financing plan are shown in Schedule A, amounts and methods of procurement and disbursements and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank group operations in Morocco are given in Schedules C and D respectively. A rap is also attached. The Staff Appraisal Report No. 6943-MOR (dated March 17 1989) is being distributed separately. 7. Agreed Actions. The government has agreed on the following key actions: (a) prepare by December 31, 1989, and implement upon their approval by the appropriate authorities, proposals to align the remuneration of INRA's research scientists with that of university faculty staff involved in research; (b) implementation of a new budgetary, financing and accounting system for INRA by March 31, 1990; (c) appointment of three accounting controllers in regional research centers by December 31, 1989; (d) separation of accounting for crop and seed multiplication from research on the INRA research farms by March 31, 1990; (e) carrying out of the extension comporent according to an implementation plan agreed with the Bank; and (f) annual recruitment of adequate research personnel required to carry out research programs. Issuance of the new accounting regulations for INRA would be a special condition of effectiveness. 8. Benefits. Economic benefits under the proposed project are expected from: (a) increase of the income of at least 130,000 small farmers; (b) increase of food crop and livestock production; and (c) development of agricultural exports. Since it is difficult to forecast the degree of success and failure of research programs and separate the impact of extension input 34asE  -4- from rainfall variations on production increases, it is impossible to quantify benefits in precise terms and no attempt has been made to calculate a rate of return. 9. Risks. Possible risks would derive from: (a) budgetary shortfalls; and (b) failure to retain trained research and extension staff. Considerable efforts have been made recently to reduce the funding risks on key agriculture projects by inclsding them, and the proposed project, as part of a targetted core program monitored under the Structural Adjustment Loan (Ln. 3001-MOR). The project has also been designed to redeploy existing staff and to tbereby limit additional staff numbers. Also, the provision of bilateral cofiiancing will ease Government's financial burden. The risk of losing trained research staff upon completion of their training abroad has been minimized by requiring trainees to work for IINRA for a fixed time. Moreover, measures taken to raise the remuneration levels for INRA scientists to those comparable with the university faculty members involved in research, should help to attract and retain the required high quality staff. The risk that extension staff will lose momentum in the face of difficulties in transferring new messages will be minimized by the strong training program to be implemented with the support of subject matter specialists. 10. Recommendation. I am satisfied that the proposed project would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Attachments Washington, D.C. March 17, 1989 248 S9  -5- Schedule A KINGDOM OF MOROCCO AGRICULTURAL RESEARCH AND EXTENSION PROJECT Estimated C4ts. and Financing Plan Estimated Costs /Ldal Fori- IgMtal -----US$ Million ---- Research 1. Strengthening of management and operations 0.4 0.6 1.0 2. Development of regional centers (CRRA) 1.8 1.1 2.9 3. Priority programs 4.5 2.7 7.2 4. Rehabilitation of experimental farms 3.6 3.2 6.8 5. Creation of research/development units 0.4 0.2 0.6 6. Development of information/documentation and publishing division 1.1 0.6 1.7 7. Fellowships, technical assistance 0.5 4.5 5.0 8. Creation of coor-dination unit -.1 .Li 0.2L Subtotal 12.4 13.0 2S.4 Extension 1. Establishment of extension structures MARA/DPA/ORHVA 2.2 1.4 3.6 2. Implementation of new extension systems 6.S 3.1 9.6 3. Integration of Bank project extension 1.9 1.4 3.3 4. Establishment of training centers 1.7 O.S 2.2 S. Audio-visual services 0.9 0.7 1.6 6. Creation of monitoring and evaluation unit 0.2 0.1 0.3 7. Technical assistance 0.2 0.8 1.0 8. Creation of coordination unit 0.1 - 0.1 9. Integration of pilot CTs .5i 1.7 .ALZ Subtotal 16.2 9.7 25.9 Total Proaecl Total base cost 28.6 22.7 51.3 Total physical contingencies 1.2 1.6 2.8 Total price contingencies 3-9 la fid Total Proiect Cost 3LZ 27 AM /I Inclusive of US$ 8.9 million taxes and duties Financina Plan Local Foreign Total ------- USs Million -- World Bank 14.2 13.8 28.0 Cofinancing .' 4.0 11.6 15.6 Government fiL 1LZ Afik Total Project Costs 24.8 27.1 S1.9 Taxes and Duties 8.9 - 8.9 Total /g Bilateral sources expected to provide parallel financing.  -6- Schedule B page 1 of 2 KINGDOM OF MOROCCO AGRICULTURAL RESEARCH AND EXTENSION PROJECT Procurement Methods and Disbursements Procurement Methods /a (US$ million) Project Elements Procurement Methods Total IEB LCB Other /b NA Costs Civil works - 9.2 - 9.2 (4.5) (4.5) Equipment, vehicles 7.5 5.7 3.4 - 16.6 (4.7) (2.8) (2.3) (9.8) Technical assistance, Fellowships 0.8 7.1 7.9 (0.5) (0.7) (1.2) Incremental Operating Costs and Personnel - 7.7 6.6 12.8 27.1 (4.1) (4.0) ( 4.4) (12.5) Total 7.5 22.6 10.7 19.9 60.8 "4.1) 11,4E? (6.8) ti51) t28 a} /a Figures in parenthesis are the respective amounts financed by the Bank. Disbrsements Category Amount Percent (Us$) (1) Civil works (a) INRA 1.8 86% of expenditures (b) DVRA 2.2 (2) Equipment and Vehicles (a) INRA 3.6 100% of foreign expenditures (b) DVRA 5.4 80% of local expenditures for items procured locally (3) Incremental Operating Costs (a) INRA 3.2 80% during calendar years (b) DVRA 7.6 1989&1990; 70% during calendar years 1991&1992; and 50% thereafter (4) Technical Assistance, (a) INRA 0.4 100% of total expenditures Fellowships and (b) DVRA 0.8 Research Contracts (5) Unallocated 3.0 Total 2 348SK  - 7 - Schedule B page 2 of 2 KINGDOM OF MOROCCO AGRICULTURAL RESEARCH AND EXTENSION PROJECT Procurement Metbods and Disbursements Disbursements (US$ million) Bank Fiscal Year 1990 1991 1992 1993 1994 1995 1996 --------US$ million